Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/193362
Authors: 
Kar, Saibal
Mandal, Biswajit
Marjit, Sugata
Mukherjee, Vivekananda
Year of Publication: 
2019
Series/Report no.: 
IZA Discussion Papers 12068
Abstract: 
Rent seeking within the vast informal segment of the developing world is a relatively underdexplored topic in the interface of labor market policies and public economics. Moreover, how rent seeking and corruption within the informal segment is affected by economic reforms targeted for the formal sector is rarely discussed in the literature. This paper fills the gap. We identify conditions under which economic reform in the formal segment will increase the rate of corruption or rent seeking in the informal sector and raise the pay-off for those involved in rent seeking activities. When formal sector contracts due to reforms, offsetting forces determine the magnitude of rent seeking in the informal sector. Thus, economic reforms may increase corruption instead of reducing it, as claimed previously.
Subjects: 
corruption
rent seeking
reforms
informal sector
regulators
JEL: 
D73
E26
M48
Document Type: 
Working Paper
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